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Family offices fear dollar depreciation, lower investment returns in wake of tariffs
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A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
Family offices have been investing with more caution since President Donald Trump’s tariff announcement in early April, according to a recent survey released by RBC Wealth Management and research firm Campden Wealth.
In a poll of 141 investment firms of ultra-wealthy families in North America, the majority (52%) of respondents said cash and other liquid assets would offer the best returns over the next 12 months. More than 30% said artificial intelligence would offer the best returns. Respondents could pick multiple answers.
In last year’s survey, growth equities and defense industries were the most popular choices, each tallying just under a third of respondents.
Family offices also lowered their expectations for 2025 returns, reporting an average expected portfolio return of 5% for the year, down from 11% in 2024. Fifteen percent of respondents said they expected negative returns, while nearly none did the year prior. The most popular investment priority for 2025 was improving liquidity, which was selected by nearly half of family offices. Last year’s top choice, at 34%, was portfolio diversification.
The survey was conducted from April through August. RBC Wealth Management’s Bill Ringham said that tariff-induced market turmoil and geopolitical tensions played a “pivotal role” in the pessimistic poll results.
While U.S. markets have rebounded to record highs since the spring, family offices still have other reasons to be bearish. A whopping 52% of survey respondents cited depreciation of the U.S. dollar as a likely market risk. The dollar has dropped by nearly 9% since the beginning of the year, and banks including UBS expect depreciation to continue.
The slowdown in exits for private equity and venture capital — a common complaint from family offices, per the report — continues to drag on. Nearly a quarter of respondents said private equity funds have not met their expected investment returns for 2025, and 15% said the same of private equity direct investments. Venture capital scored the lowest net sentiment, with 33% of respondents reporting unsatisfactory returns.
That said, family offices are flocking to cash not only to mitigate risk, but also to make opportunistic bets in the future, Ringham said.
“They’re taking a much longer vision of their legacy and their family,” said Ringham, who directs private wealth strategies for RBC’s U.S. arm. “By doing this, they’re probably creating the capital to take advantage of opportunities as they see them coming through in the market.”
This cautious optimism can be seen in the respondents’ intended asset allocation changes, he said. Only a net 3% of family offices plan to increase their allocation to cash and liquid assets, compared to 20% for direct private equity investments, and 13% for private equity funds.
Investing in private markets is a necessity to create enough wealth to beat inflation and accommodate a growing family, Ringham said.
“When family offices are putting together portfolios, they’re obviously looking at time horizons that can last much longer than individuals that don’t have this type of legacy wealth. I mean, we’re looking at 100 years to 100 years plus,” he said. “If you’re taking the long view, even though you might realize that private equity hasn’t been performing that well over the past couple years, it’s still a place where historical returns might have exceeded returns that you might find elsewhere.”
Interest rates are widely expected to remain at 3.75% as Bank of England policymakers prioritise curbing above-target inflation while also monitoring economic growth, according to expert analysis.
The Bank’s Monetary Policy Committee (MPC) is anticipated to leave borrowing costs unchanged when it announces its latest decision on Thursday, marking its first interest rate setting meeting of the year.
This follows a rate cut delivered before Christmas, which was the fourth such reduction.
At the time, Governor Andrew Bailey noted that the UK had “passed the recent peak in inflation and it has continued to fall”, enabling the MPC to ease borrowing costs. However, he cautioned that any further cuts would be a “closer call”.
Since that decision, official data has revealed that inflation unexpectedly rebounded in December, rising for the first time in five months.
The Consumer Prices Index (CPI) inflation rate reached 3.4% for the month, an increase from 3.2% in November, with factors such as tobacco duties and airfares contributing to the upward pressure on prices.
Economists suggest this inflation uptick is likely to reinforce the MPC’s inclination to keep rates steady this month.
Philip Shaw, an analyst for Investec, stated: “The principal reason to hold off from easing again is that at 3.4% in December, inflation remains well above the 2% target.”
He added: “But with the stance of policy less restrictive than previously, there are greater risks that further easing is unwarranted.”
Shaw also highlighted other data points the MPC would consider, including gross domestic product (GDP), which saw a return to growth of 0.3% in November – a potentially encouraging sign for policymakers.
Matt Swannell, chief economic advisor to the EY ITEM Club, affirmed: “Keeping bank rate unchanged at 3.75% at next week’s meeting looks a near-certainty.”
He noted that while some MPC members who favoured a cut in December still have concerns about persistent wage growth and inflation, recent data has not been compelling enough to prompt back-to-back reductions.
Edward Allenby, senior economic advisor at Oxford Economics, forecasts the next rate cut to occur in April.
He explained: “The MPC will continue to face a delicate balancing act between supporting growth and preventing inflation from becoming entrenched, with forthcoming data on pay settlements likely to play a decisive role in shaping the next policy move.”
The Bank’s policymakers have consistently voiced concerns regarding the pace of wage increases in the UK, which can fuel overall inflation.
India’s budget focuses on infrastructure and defence spending and tax breaks for data-centre investments.
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New Income Tax Act 2025 to come into effect from April 1, key reliefs announced in Budget 2026
New Delhi: Finance Minister Nirmala Sitharaman on Sunday said that the Income Tax Act 2025 will come into effect from April 1, 2026, and the I-T forms have been redesigned such that ordinary citizens can comply without difficulty for ease of living.
The new measures include exemption on insurance interest awards, nil deduction certificates for small taxpayers, and extension of the ITR filing deadline for non-audit cases to August 31.
Individuals with ITR 1 and ITR 2 will continue to file I-T returns till July 31.
“In July 2024, I announced a comprehensive review of the Income Tax Act 1961. This was completed in record time, and the Income Tax Act 2025 will come into effect from April 1, 2026. The forms have been redesigned such that ordinary citizens can comply without difficulty, for) ease of living,” she said while presenting the Budget 2026-27
In a move that directly eases cash-flow pressure on individuals making overseas payments, the Union Budget announced lower tax collection at source across key categories.
“I propose to reduce the TCS rate on the sale of overseas tour programme packages from the current 5 per cent and 20 per cent to 2 per cent without any stipulation of amount. I propose to reduce the TCS rate for pursuing education and for medical purposes from 5 per cent to 2 per cent,” said Sitharaman.
She clarified withholding on services, adding that “supply of manpower services is proposed to be specifically brought within the ambit of payment contractors for the purpose of TDS to avoid ambiguity”.
“Thus, TDS on these services will be at the rate of either 1 per cent or 2 per cent only,” she mentioned during her Budget speech.
The Budget also proposes a tax holiday for foreign cloud companies using data centres in India till 2047.
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